US Internal Revenue Service: i1040nr--2002

8/14/2019 US Internal Revenue Service: i1040nr--2002

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Department of the TreasuryInternal Revenue Service2002

Instructions forForm 1040NRU.S. Nonresident Alien Income Tax ReturnSection references are to the Internal Revenue Code unless otherwise noted.

for qualified adoption expenses you Standard mileage rate. The 2003 ratepaid. See Form 8839 for details. for business use of your vehicle is 36General Instructions cents a mile.Self-employed health insurancededuction. You may be able to deductFor details on the changes for Items To Noteup to 70% of your health insurance2002 and 2003, seePub. 553.expenses. See the instructions for Form 1040NR-EZ. You may be able to

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line 29 on page 14. use Form 1040NR-EZ if your onlyincome from U.S. sources is wages,Standard mileage rate. The 2002 rateWhats New for 2002?salaries, tips, taxable refunds of statefor business use of your vehicle is 361/2

Tax rates reduced. Most of the tax and local income taxes, andcents a mile.rates have decreased by 1/2%. The new scholarship or fellowship grants. For

Coverdell education savings accountrates are reflected in the Tax Table that more details, see Form 1040NR-EZ(ESA) distributions. If you received abegins on page 27 and the Tax Rate and its instructions.distribution from a Coverdell ESA inSchedules on page 39. Other reporting requirements. If you2002, you now report only the taxableEducator expenses. If you were an meet the closer connection to a foreignamount of the distribution on line 21.educator, you may be able to deduct up country exception to the substantialAlso, a distribution may not be taxableto $250 of expenses you paid. See the presence test, you must fileif it was used to pay qualifiedinstructions for line 24 on page 13. Form 8840. If you exclude days ofelementary and secondary school

presence in the United States forStudent loan interest deduction. The expenses. See Pub. 970.purposes of the substantial presence60-month limit on interest payments no

Qualified state tuition program test, you must file Form 8843. This rulelonger applies and the modifiedearnings. If you received a distribution, does not apply to foreign-government-adjusted gross income (AGI) limit hasyou may now be able to exclude part or related individuals who exclude days ofincreased. See the instructions forall of the earnings from income. See presence in the United States. Certainline 26 on page 13.the instructions for line 21 on page 12. dual-resident taxpayers who claim tax

Retirement savings contributionstreaty benefits must file Form 8833. AQualifying childNew definition.

credit. You may be able to take a dual-resident taxpayer is one who is aNew rules apply to determine who is acredit of up to $1,000 for qualifiedresident of both the United States andqualifying child for purposes of the childretirement savings contributions.another country under each countrystax credit. See the instructions for lineHowever, you cannot take this credit iftax laws.7(c), column (4), on page 8.your AGI on line 35 is more than

$25,000. See the instructions for line 45 Additional Informationon page 17. What to Look for in 2003If you need more information, our free

Health insurance credit for eligible IRA deduction allowed to more publications may help you. Pub. 519,recipients. You may be able to take people covered by retirement plans. U.S. Tax Guide for Aliens, will be thethis credit only if you were an eligible You may be able to take an IRA most important, but the followingtrade adjustment assistance (TAA), deduction if you were covered by a publications may also help.alternative TAA, or Pension Benefit retirement plan and your 2003 modifiedGuaranty Corporation pension AGI is less than $50,000 ($70,000 if a

Pub. 525 Taxable and Nontaxablerecipient. By February 18, 2003, Form qualifying widow(er)).Income8887 showing that you were an eligible

Self-employed health insurance Pub. 529 Miscellaneous Deductionsrecipient should be sent to you. Use deduction. You may be able to deduct Pub. 552 Recordkeeping for IndividualsForm 8885 to figure the amount, if any,

up to 100% of your health insurance Pub. 597 Information on the Unitedof your health insurance credit.expenses. States-Canada Income Tax

IRA deduction expanded. You mayTreatyAdoption credit. If you adopt a childbe able to deduct up to $3,000 ($3,500

Pub. 901 U.S. Tax Treatieswith special needs, you may be able toif age 50 or older at the end of 2002). IfPub. 910 Guide to Free Tax Servicestake a $10,000 credit regardless of theyou were covered by a retirement plan,

(includes a list of allamount of your expenses.you may be able to take an IRApublications)deduction if your modified AGI is less Child and dependent care credit

than $44,000 ($64,000 if a qualifying increased. You may be able to take a These free publications and thewidow(er)). See the instructions for credit of up to $1,050 for the expenses forms and schedules you will need areline 25 on page 13. you pay for the care of one qualifying available on request from the InternalAdoption credit. You may be able to person; $2,100 if you pay for the care Revenue Service. You may downloadtake a credit of up to $10,000 per child of two or more qualifying persons. them from the IRS Web Site at

Cat. No. 11368V


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www.irs.gov. Also see Taxpayer United States for the substantial You have no U.S. source income,Assistance on page 26 for other ways presence test. orto get them (as well as information on Days you commute to work in the Your income is exempt from U.S.receiving IRS assistance in completing United States from a residence in tax.the forms). Canada or Mexico if you regularly However, if you have no gross

commute from Canada or Mexico. income for 2002, do not complete the Days you are in the United States for schedules for Form 1040NR. Instead,Resident Alien orless than 24 hours when you are in attach a list of the kinds of exclusions

Nonresident Alien transit between two places outside of you claim and the amount of each.the United States.If you are not a citizen of the United Exception. If you were a Days you are in the United States asStates, specific rules apply to determine nonresident alien student, teacher, ora crew member of a foreign vessel.

if you are a resident alien or a trainee who was temporarily present in Days you intend, but are unable, tononresident alien for tax purposes. the United States under an F, J, M,leave the United States because of aGenerally, you are considered a or Q visa, you must file Form 1040NRmedical condition that develops whileresident alien if you meet either the (or Form 1040NR-EZ) only if you haveyou are in the United States.green card test or the substantial income that is subject to tax under Days you are an exempt individualpresence test for 2002. (These tests section 871 (that is, the income items(defined below).are explained below.) Even if you do listed on lines 8 through 21 on page 1

not meet either of these tests, you may of Form 1040NR and on lines 74aExempt individual. For thesebe able to choose to be treated as a through 83 on page 4 ofpurposes, an exempt individual isU.S. resident for part of 2002. See Form 1040NR).generally an individual who is a:First-Year Choice in Pub. 519 for 2. You were a nonresident alien not Foreign-government-relateddetails. engaged in a trade or business in theindividual,

United States during 2002 and: Teacher or trainee,You are generally considered a

You received income from U.S. Student, ornonresident alien for the year if you are

sources that is reportable on lines 74a Professional athlete who isnot a U.S. resident under either of

through 83 andtemporarily in the United States tothese tests. However, even if you are a Not all of the U.S. tax that youcompete in a charitable sports event.U.S. resident under one of these tests,

owe was withheld from that income.Note: Alien individuals with Q visasyou may still be considered a3. You represent a deceasedare treated as either students, teachers,nonresident alien if you qualify as a

person who would have had to fileor trainees and, as such, are exemptresident of a treaty country within theForm 1040NR.individuals for purposes of themeaning of the tax treaty between the

4. You represent an estate or trustsubstantial presence test if theyUnited States and that country. Youthat has to file Form 1040NR.otherwise qualify. Q visas are issuedmay download the complete text of

to aliens participating in certainmost U.S. tax treaties at www.irs.gov. Exception for children under age 14.international cultural exchangeTechnical explanations for many of If your child was under age 14 at theprograms.those treaties are also available at that end of 2002, had income only fromsite. See Pub. 519 for more details interest and dividends that are

regarding days of presence in the effectively connected with a U.S. tradeFor more details on resident andUnited States for the substantial or business, and that income totalednonresident status, the tests forpresence test. less than $7,500, you may be able toresidence, and the exceptions to them,

elect to report your childs income onsee Pub. 519.your return. But you must useCloser Connection to ForeignForm 8814 to do so. If you make thisGreen Card Test Countryelection, your child does not have to fileYou are a resident for tax purposes if Even though you would otherwise meet a return. For more details, see Formyou were a lawful permanent resident the substantial presence test, you can 8814.(immigrant) of the United States at any be treated as a nonresident alien if you:

time during 2002. Filing a deceased persons return. Were present in the United States forThe personal representative must filefewer than 183 days during 2002,

Substantial Presence Test the return for a deceased person who Establish that during 2002 you had awas required to file a return for 2002. AYou are considered a U.S. resident if tax home in a foreign country, andpersonal representative can be anyou meet the substantial presence test Establish that during 2002 you had aexecutor, administrator, or anyone whofor 2002. You meet this test if you were closer connection to one foreignis in charge of the deceased personsphysically present in the United States country in which you had a tax homeproperty.for at least: than to the United States unless you

had a closer connection to two foreign1.31 days during 2002 and Filing for an estate or trust. If you arecountries.2. 183 days during the period 2002, filing Form 1040NR for a nonresident

See Pub. 519 for more information.2001, and 2000, counting all the days alien estate or trust, change the form toof physical presence in 2002, but only reflect the provisions of Subchapter J,1/3 the number of days of presence in Who Must File Chapter 1, of the Internal Revenue2001 and only 1/6 the number of days in Code. You may find it helpful to refer toFile Form 1040NR if any of the2000. Form 1041 and its instructions.following four conditions applies to you.

Generally, you are treated as 1. You were a nonresident alien Simplified Procedure forpresent in the United States on any day engaged in a trade or business in the

Claiming Certain Refundsthat you are physically present in the United States during 2002. You mustcountry at any time during the day. file even if You may use this procedure only if youHowever, there are exceptions to this None of your income came from a meet all of the following conditions forrule. In general, do not count the trade or business conducted in the the tax year.following as days of presence in the United States, You were a nonresident alien.

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Nonresident aliens who make dual-status return for the last year ofPrivate Delivery Servicesthis election may forfeit the right U.S. residency. To determine if you are

You can use certain private delivery to claim benefits otherwise a former U.S. long-term resident, seeCAUTION!

services designated by the IRS to meet available under a U.S. tax treaty. For page 6.the timely mailing as timely filing/ more details, see the specific treaty.paying rule for tax returns and Income Subject to Tax forpayments. The most recent list of Dual-Status YearDual-Status Taxpayersdesignated private delivery services

As a dual-status taxpayer not filing aNote: If you elect to be taxed as awas published by the IRS in Septemberjoint return, you are taxed on incomeresident alien (discussed earlier), the2002. The list includes only thefrom all sources for the part of the yearspecial instructions and restrictionsfollowing:you were a resident alien. Generally,discussed heredo notapply.

Airborne Express (Airborne):you are taxed on income only from U.S.Overnight Air Express Service, Next Dual-Status Tax Year sources for the part of the year you

Afternoon Service, and Second Day were a nonresident alien. However, allA dual-status year is one in which youService. income effectively connected with thechange status between nonresident DHL Worldwide Express (DHL): DHL conduct of a trade or business in theand resident alien. Different U.S.Same Day Service, and DHL USA United States is taxable.income tax rules apply to each status.Overnight.

Income you received as aMost dual-status years are the years Federal Express (FedEx): FedEx dual-status taxpayer from sourcesof arrival or departure. Before youPriority Overnight, FedEx Standard outside the United States while aarrive in the United States, you are aOvernight, FedEx 2Day, FedEx resident alien is taxable even if younonresident alien. After you arrive, youInternational Priority, and FedEx became a nonresident alien aftermay or may not be a resident,International First. receiving it and before the close of thedepending on the circumstances. United Parcel Service (UPS): UPS tax year. Conversely, income youIf you become a U.S. resident, youNext Day Air, UPS Next Day Air Saver, received from sources outside thestay a resident until you leave theUPS 2nd Day Air, UPS 2nd Day Air United States while a nonresident alienUnited States. You may become aA.M., UPS Worldwide Express Plus, is not taxable in most cases even if younonresident alien when you leave, if,and UPS Worldwide Express. became a resident alien after receivingafter leaving (or after your last day of

it and before the close of the tax year.The private delivery service can tell lawful permanent residency if you metIncome from U.S. sources is taxableyou how to get written proof of the the green card test) and for thewhether you received it while amailing date. remainder of the calendar year of yournonresident alien or a resident alien.departure, you have a closer

Private delivery services cannot connection to a foreign country than to Restrictions for Dual-Statusdeliver items to P.O. boxes. You the United States, and, during the nextTaxpayersmust use the U.S. PostalCAUTION

!calendar year, you are not a U.S.

Service to mail any item to an IRS P.O. resident under either the green card Standard deduction. You may notbox address. test or the substantial presence test. take the standard deduction.

See Pub. 519. Head of household. You may not usethe Head of HouseholdTax TableElection To Be Taxed as What and Where to File for acolumn or Tax Rate Schedule.

Dual-Status Yeara Resident AlienJoint return. You may not file a jointIf you were a U.S. resident on the lastYou can elect to be taxed as a U.S. return unless you elect to be taxed as a

day of the tax year, file Form 1040.resident for the whole year if all of the resident alien (see above) in lieu ofWrite Dual-Status Return across thefollowing apply: these dual-status taxpayer rules.top and attach a statement showing You were married. Tax rates. If you were married and ayour income for the part of the year you

Your spouse was a U.S. citizen or nonresident of the United States for allwere a nonresident. You may use Formresident alien on the last day of the tax or part of the tax year and you do not1040NR as the statement; writeyear. make the election to be taxed as aDual-Status Statement across the top. You file a joint return for the year of resident alien as discussed earlier, youFile your return and statement with thethe election using Form 1040, 1040A, must use the Tax Table column or TaxInternal Revenue Service Center,or 1040EZ. Rate Schedule for Married FilingPhiladelphia, PA 19255, U.S.A.

Separatelyto figure your tax on incomeTo make this election, you mustIf you were a nonresident on the effectively connected with a U.S. tradeattach the statement described in

last day of the tax year, file Form or business. If married, you may notPub. 519 to your return. Do not use1040NR. Write Dual-Status Return use the SingleTax Table column orForm 1040NR.across the top and attach a statement

Tax Rate Schedule.showing your income for the part of theYour worldwide income for the whole Deduction for exemptions. As ayear you were a U.S. resident. Youyear must be included and will be taxed dual-status taxpayer, you usually will bemay use Form 1040 as the statement;under U.S. tax laws. You must agree to entitled to your own personalwrite Dual-Status Statement acrosskeep the records, books, and other exemption. Subject to the general rulesthe top. File your return and statementinformation needed to figure the tax. If for qualification, you are allowedwith the Internal Revenue Serviceyou made the election in an earlier exemptions for your spouse andCenter, Philadelphia, PA 19255, U.S.A.year, you may file a joint return or dependents in figuring taxable income

Statements. Any statement you fileseparate return for 2002. If you file a for the part of the year you were awith your return must show your name,separate return, use Form 1040 or resident alien. The amount you mayaddress, and identifying numberForm 1040A. Your worldwide income claim for these exemptions is limited to(defined on page 7).for the whole year must be included your taxable income (determined

whether you file a joint or separate Former U.S. long-term residents are without regard to exemptions) for thereturn. required to file Form 8854 with their part of the year you were a resident



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alien. You may not use exemptions Income derived from the separate1. Tax withheld from wages earned inproperty of one spouse that is not(other than your own) to reduce taxable the United States and taxes withheldearned income, trade or businessincome to below zero for that period. at the source from various items ofincome, or partnership distributiveincome from U.S. sources other thanshare income. The spouse with thewages. This includes U.S. taxSpecial rules apply for exemptionsseparate property must report thiswithheld on dispositions of U.S. realfor the part of the tax year a dual-statusincome on his or her separate return.property interests.taxpayer is a nonresident alien if the

See Pub. 555 for more details.taxpayer is a resident of Canada, When filing Form 1040, show theMexico, Japan, or the Republic of total tax withheld on line 62. Enter Kinds of IncomeKorea (South Korea); a U.S. national; amounts from the attached statement

You must divide your income for the taxor a student or business apprentice

(Form 1040NR, lines 58, 65, 66a, year into the following three categories.from India. See Pub. 519. 66b, 67a, and 67b) to the left of1. Income effectively connected withline 62 and identify and include in the

a U.S. trade or business. This incomeEducation credits. You may not take amount on line 62.is taxed at the same rates that apply toan education credit unless you elect to

When filing Form 1040NR, show U.S. citizens and residents. Report thisbe taxed as a resident alien (see pageincome on page 1 of Form 1040NR.the total tax withheld on lines 58, 65,4) in lieu of these dual-status taxpayerPub. 519 describes this income in66a, 66b, 67a, and 67b. Enter therules.greater detail.amount from the attached statement

2. U.S. income not effectively(Form 1040, line 62) to the left ofconnected with a U.S. trade orHow To Figure Tax for line 58 and identify and include in thebusiness. This income is taxed at 30%amount on line 58.Dual-Status Yearunless a treaty between your country

When you figure your U.S. tax for a 2. Tax paid with Form 1040-ES or and the United States has set a lowerdual-status year, you are subject to Form 1040-ES (NR). rate that applies to you. Report thisdifferent rules for the part of the year income on page 4 of Form 1040NR.

3. Tax paid with Form 1040-C at theyou were a resident and the part of the Pub. 519 describes this income moretime of departure from the Unitedyear you were a nonresident. fully.

States. When filing Form 1040,include the tax paid with Form Note: Use line 55 to report the 4% taxAll income for the period of1040-C with the total payments on on U.S. source gross transportation

residence and all income that is line 69. Identify the payment in the income.effectively connected with a trade or area to the left of the entry. 3. Income exempt from U.S. tax.business in the United States for the

Complete items L and/or M on page 5period of nonresidence, after allowable of Form 1040NR and, if applicable,As a dual-status taxpayer, youdeductions, is combined and taxed at line 22 on page 1.generally may claim tax credits usingthe same rates that apply to U.S. the same rules that apply to residentcitizens and residents. Income that is aliens. However, there are certainnot effectively connected with a trade or Dispositions of U.S. Realrestrictions that may apply. See Pub.business in the United States for the 519 for details. Property Interestsperiod of nonresidence is subject to the Gain or loss on the disposition of a U.S.

flat 30% rate or lower treaty rate. No real property interest (see Pub. 519 forHow To Report Incomedeductions are allowed against this definition) is taxed as if the gain or lossincome. on Form 1040NR were effectively connected with the

conduct of a U.S. trade or business.If you were a resident alien on the See section 897 and its regulations.Community Income

last day of the tax year and you are If either you or your spouse (or bothReport gains and losses on thefiling Form 1040, add to the tax from you and your spouse) were nonresident

disposition of U.S. real propertythe Tax Table, Tax Rate Schedules, aliens at any time during the tax yearinterests on Schedule D (Form 1040)Capital Gain Tax Worksheet, and you had community income duringand Form 1040NR, line 14. Also, netSchedule D (Form 1040), Schedule J the year, treat the community incomegains may be subject to the alternative(Form 1040), or Form 8615 the tax on according to the applicable communityminimum tax. See the instructions forproperty laws except as follows:the noneffectively connected income.line 41.

Earned income of a spouse, otherEnter the total tax on Form 1040, linethan trade or business income or42. Next to line 42 show the two

Income You May Elect Topartnership distributive share income.amounts. If you are filing FormThe spouse whose services produced Treat as Effectively1040NR, enter the tax from the Tax the income must report it on his or herTable, Tax Rate Schedules, Capital Connected With a U.S. Tradeseparate return.Gain Tax Worksheet, Schedule D or Business Trade or business income, other than(Form 1040), Schedule J (Form 1040),partnership distributive share income. You may elect to treat some items ofor Form 8615 on line 40 and the tax onTreat this income as received by the income as effectively connected with a

the noneffectively connected income onhusband unless the wife exercises U.S. trade or business. The election

line 52. substantially all of the management applies to all income from real propertyover the trade or business. located in the United States and held

Credits. You are allowed a credit Partnership distributive share income for the production of income and to allagainst your U.S. income tax liability for (or loss). Treat this income (or loss) as income from any interest in suchcertain taxes you paid, are considered received by the spouse who is the property. This includes:to have paid, or that were withheld from partner and report it on that spouses Gains from the sale or exchange ofyour income. These include: return. such property or an interest therein.

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Gains on the disposal of timber, coal, If you were a former citizen or former the rules of section 871(a). Seeor iron ore with a retained economic LTR and you relinquished your pages 23 and 24 for more details oninterest. citizenship or terminated your residency the tax imposed under section 871(a).

after February 5, 1995, you are subject Rents and royalties from mines, oil or If you have items of U.S. sourceto the provisions of section 877 on yourgas wells, or other natural resources. income that are subject to tax underU.S. source income if one of theThe election does not apply to section 871(a), you will be taxed at aprincipal purposes of your action was todispositions of U.S. real property rate of 30% on your gross income onlyavoid U.S. taxes.interests discussed earlier. if this tax exceeds the tax at the regular

graduated rates on your net income. IfYou are considered to have taxTo make the election, attach athe 30% tax on your gross incomeavoidance as a principal purpose if (a)statement to your return for the year ofexceeds the graduated tax on your netyour average annual net income tax forthe election. Include in your statement:

income, report those items on thethe last 5 tax years ending before the1. That you are making the election. appropriate lines on page 4 ofdate of your action to relinquish your2. A complete list of all of your real Form 1040NR. If the graduated tax oncitizenship or terminate your residency

property, or any interest in real your net income exceeds the 30% taxwas more than $100,000 or (b) your netproperty, located in the United States on your gross income, report yourworth on the date of your action was(including location). Give the legal income on the appropriate lines on$500,000 or more. These amounts areidentification of U.S. timber, coal, or page 1 of Form 1040NR and attach aadjusted for inflation if your expatriationiron ore in which you have an interest. statement describing the items andaction is after 1996 (see the chart

3. The extent of your ownership in amounts of income that are subject tobelow).the real property. tax by reason of section 877.

Although there are exceptions to4. A description of any substantialIf you have other items of U.S.these rules, you will qualify for animprovements to the property.

source income that are not subject toexception only if you are eligible to5. Your income from the property.tax under section 871(a), you will besubmit a ruling request to the IRS that6. The dates you owned thetaxed on a net basis at the regularyour renunciation of U.S. citizenship orproperty.graduated rates applicable totermination of U.S. residency did not

7. Whether the election is under individuals. Report this income on thehave as one of its principal purposessection 871(d) or a tax treaty.appropriate lines on page 1 ofthe avoidance of U.S. tax and you8. Details of any previous elections Form 1040NR.submit such a ruling request in aand revocations of the real property

complete and good faith manner. For For purposes of computing the taxelection.more details about these exceptions, due under section 877, the followingsee section 877(c); Notice 97-19, items of income are treated as U.S.1997-1 C.B. 394; and Notice 98-34,Foreign Income Taxed by the source.1998-2 C.B. 29. You can findUnited States 1. Gains on the sale or exchange ofNotice 97-19 on page 40 of Internal

personal property located in the UnitedYou may be required to report some Revenue Bulletin 1997-10 atStates.income from foreign sources on your www.irs.gov/pub/irs-irbs/

2. Gains on the sale or exchange ofU.S. return if it is effectively connected irb97-10.pdf. You can find Noticestock issued by a domestic corporationwith a U.S. trade or business. For this 98-34 on page 30 of Internal Revenueor debt obligations of the United States,foreign income to be treated as Bulletin 1998-27 at www.irs.gov/pub/U.S. persons, a state or politicaleffectively connected with a U.S. trade irs-irbs/irb98-27.pdf.subdivision thereof, and the District of

or business, you must have an office or If the rules of section 877 apply to Columbia.other fixed place of business in theyou, check the Yes box in item P 3. Income or gain derived fromUnited States to which the income canon page 5 of the form. You are stock in a foreign corporation if yoube attributed. For more information,subject to tax on U.S. source income owned, either directly or indirectlyincluding a list of the types of foreignand gains on either (a) a net basis at (through the rules of sections 958(a)source income that must be treated asthe graduated rates applicable to and 958(b)) more than 50% of the voteeffectively connected with a U.S. tradeindividuals with allowable deductions or or value of the stock of the corporationor business, see Pub. 519.(b) a gross basis at a rate of 30% under on the date of your renunciation of

Special Rules for Former Inflation-Adjusted Amounts for Expatriation Actions After 1996U.S. Citizens and Former

IF you THEN, the rules outlined on this page apply if ...U.S. Long-Term expatriated

during ...ResidentsYour 5-yearSection 877 may affect your tax liability Your netaverage annualif you are a former citizen or former worth equalednet income tax ORlong-term resident (LTR) of the United orwas moreStates. You are a former LTR if you exceeded ...than ...were a lawful permanent resident of the

United States (that is, you had a green 1997 $106,000 $528,000card) for at least 8 of the 15

1998 109,000 543,000consecutive tax years ending with theyear your residency ended. In 1999 110,000 552,000determining if you are a former LTR, do

2000 112,000 562,000not count any year that you were

2001 116,000 580,000treated as a resident of another countryunder a tax treaty and you did not 2002 120,000 599,000waive treaty benefits.



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citizenship or termination of residency Identifying number. If you are an 2. You paid more than half of theor at any time during the 2 years individual, you are generally required to cost to keep up your home in 2002.preceding such date. Such income or enter your social security number 3. You lived apart from your spousegain is considered U.S. source only to (SSN). To apply for an SSN, get during the last 6 months of 2002.the extent of your share of the earnings Form SS-5 from a Social Security 4. Your home was the principaland profits earned or accumulated prior Administration (SSA) office or, if in the home of your child, stepchild, orto the date of renunciation of U.S. United States, you may call the SSA at adopted child for more than half ofcitizenship or termination of residency. 1-800-772-1213. Fill in Form SS-5 and 2002 or was the principal home of your

return it to the SSA. foster child for all of 2002.You may not claim that a tax treaty

5. You are able to claim aIf you do not have an SSN and arein effect on August 21, 1996, preventsdependency exemption for the child.not eligible to get one, you must get anthe imposition of tax by reason ofHowever, you can still meet the test if

individual taxpayer identificationsection 877. the childs other parent claims him ornumber (ITIN). To apply for an ITIN,her as a dependent under the rules inAnnual Information file Form W-7 with the IRS. It usuallyPub. 501 for children of divorced ortakes about 4-6 weeks to get an ITIN.Statement separated parents.Enter your ITIN wherever your SSN

If the expatriation rules apply to youis requested on your tax return. If Line 6Qualifying widow(er) withand you are liable for U.S. taxes, youyou are required to include another dependent child. You may check themust attach an annual informationpersons SSN on your return and that box on line 6 if all seven of thestatement to Form 1040NR that setsperson does not have and cannot get following apply.forth by category (for example,an SSN, enter that persons ITIN.

dividends, interest, etc.) all items of 1. You were a resident of Canada,Note: An ITIN is for tax use only. ItU.S. and foreign source gross income Mexico, Japan, or the Republic ofdoes not entitle you to social security(whether or not taxable in the United Korea (South Korea), or were a U.S.benefits or change your employment orStates). The statement must identify the national.immigration status under U.S. law.source of such income (determined 2. Your spouse died in 2000 or

under section 877 as modified by 2001 and you did not remarry beforeIf you are filing Form 1040NR for anSection V of Notice 97-19) and those the end of 2002.estate or trust, enter the employeritems of income subject to tax under 3. You have a child, stepchild,identification number of the estate orsection 877. If the expatriation rules adopted child, or foster child for whomtrust.apply to you, you must attach this you can claim a dependency

An incorrect or missing identifyingstatement to Form 1040NR, even if you exemption.number may increase your tax orhave fully satisfied your U.S. tax liability 4. This child lived in your home forreduce your refund.through withholding of tax at source. all of 2002. Temporary absences, such

as for school, vacation, or medical care,If you fail to furnish a completecount as time lived in the home.statement, as described above, you will Filing Status 5. You paid over half of the cost ofnot be considered to have filed a truekeeping up your home.The amount of your tax depends onand accurate return. Therefore, you will

6. You were a resident alien or U.S.your filing status. Before you decidenot be entitled to any deductions orcitizen the year your spouse died. Thiswhich box to check, read the followingcredits if your tax liability for your 2002refers to your actual status, not theexplanations.taxable year is later adjusted. Seeelection that some nonresident alienssection 874(a). Were you single or married? If youcan make to be taxed as U.S.were married on December 31,See Notice 97-19, Section VII, for residents.consider yourself married for the wholeadditional information. 7. You were entitled to file a jointyear. If you were single, divorced, orreturn with your spouse the year he orlegally separated under a decree ofshe died, even if you did not actually dodivorce or separate maintenance onso.Line Instructions for December 31, consider yourself single

for the whole year. If you meet the testsForm 1040NR described under Married persons wholive apart below, you may consider Exemptionsyourself single for the whole year. Exemptions for estates and trusts are

Name, Address, and If your spouse died in 2002, consider described in the instructions for line 38yourself married to that spouse for the beginning on page 14.Identifying Numberwhole year, unless you remarried Note: Residents of India who were

Name. If you are filing Form 1040NR before the end of 2002. students or business apprentices mayfor an estate or trust, enter the name of

be able to claim exemptions for theirMarried persons who live apart.the estate or trust, and your name, title, spouse and dependents. See Pub. 519Some married persons who have aand address. Also, give the name and for details.child and who do not live with theiraddress of any U.S. grantors and spouse may file as single. If you meet Line 7bSpouse. If you checkedbeneficiaries. all five of the following tests and you filing status box 3 or 4, you can take anP.O. box. Enter your box number only are a married resident of Canada or exemption for your spouse only if yourif your post office does not deliver mail Mexico, or you are a married U.S. spouse had no gross income for U.S.to your home. national, check the box on line 1. If you tax purposes and cannot be claimed as

meet the tests and you are a marriedForeign address. Enter the a dependent on another U.S.resident of Japan or the Republic ofinformation in the following order: City, taxpayers return. (You can do thisKorea (South Korea), check the box onprovince or state, and country. Follow even if your spouse died in 2002.) Inline 2.the countrys practice for entering the addition, if you checked filing status

postal code. Do not abbreviate the 1. You file a return separate from box 4, your spouse must have livedcountry name. your spouse. with you in the United States at some



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time during 2002. Finally, your spouse your divorce decree or written Is a U.S. citizen or resident alien (seemust have an SSN or an ITIN. If your separation agreement went into effect Resident Alien or Nonresident Alienspouse is not eligible to obtain an SSN, before 1985 and it states that you can on page 2).he or she can file Form W-7 with the claim this child as your dependent. A child placed with you by anIRS to apply for an ITIN. See authorized placement agency for legalOther Dependent Children. IncludeIdentifying number on page 7 for adoption is an adopted child even ifthe total number of children who did notadditional information. the adoption is not final. An authorizedlive with you for reasons other than

placement agency includes any persondivorce or separation on the lineLine 7c Dependents. Only U.S.authorized by state law to placelabeled Dependents on 7c not enterednationals and residents of Canada,children for legal adoption.above.Mexico, Japan, and the Republic of

Korea (South Korea), may claim A grandchild is any descendant ofLine 7c, Column (2). You must

exemptions for their dependents. If you your son, daughter, adopted child, orenter each dependents identifyingwere a U.S. national (American stepchild and includes your great-number (SSN, ITIN, or adoptionSamoan) or a resident of Canada or grandchild, great-great-grandchild, etc.taxpayer identification number (ATIN)).Mexico, you can claim exemptions for If you do not enter the correctyour children and other dependents on identifying number, at the time wethe same terms as U.S. citizens. See process your return we may disallow Rounding Off to WholePub. 501 for more details. Be sure to the exemption claimed for thecomplete item I on page 5 of the form. Dollarsdependent and reduce or disallow anyIf you were a resident of Japan or the other tax benefits (such as the child tax To round off cents to the nearest wholeRepublic of Korea (South Korea), you credit) based on the dependent. dollar on your forms and schedules,may claim an exemption for any of your drop amounts under 50 cents and

For details on how yourchildren who lived with you in the increase amounts from 50 to 99 centsdependent can get anUnited States at some time during to the next dollar. If you do round off,identifying number, see2002.

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do so for all amounts. But if you have toIdentifying numberon page 7. If your

add two or more amounts to figure theYou can take an exemption for each dependent will not have a number byamount to enter on a line, include centsof your dependents. If you have more the due date of your return, see when adding and only round off thethan four dependents, attach a Extension of time to fileon page 3. total.statement to your return with the

If your dependent child was bornrequired information.and died in 2002 and you do not have

Children Who Did Not Live With an identifying number for the child, you Income EffectivelyYou Due to Divorce or Separation. If may attach a copy of the childs birthyou checked filing status box 1 or 3 and certificate instead and enter Died in Connected With U.S.are claiming as a dependent a child column (2).who did not live with you under the Trade or BusinessAdoption Taxpayer Identificationrules explained in Pub. 501 for children Pub. 519 explains how income isNumbers (ATINs). If you have aof divorced or separated parents, attach classified and what income you shoulddependent who was placed with you byForm 8332 or similar statement to your report here. The instructions for thisan authorized placement agency andreturn. But see the Exception below. section assume you have decided thatyou do not know his or her SSN, you

the income involved is effectivelyIf your divorce decree or separation must get an ATIN for the dependentconnected with a U.S. trade or

agreement went into effect after 1984, from the IRS. An authorized placement business in which you were engaged.you may attach certain pages from the agency includes any person authorizedBut your decision may not be easy.decree or agreement instead of Form by state law to place children for legalInterest, for example, may be8332. To be able to do this, the decree adoption. See Form W-7A for details.effectively connected with a U.S. tradeor agreement must state: Line 7c, Column (4). Check the boxor business, it may not be, or it may be1. You can claim the child as your in this column if your dependent is atax-exempt. The tax status of incomedependent without regard to any qualifying child for the child tax creditalso depends on its source. Undercondition, such as payment of support, (defined below). If you have at leastsome circumstances, items of incomeand one qualifying child, you may be able tofrom foreign sources are treated as2. The other parent will not claim take the child tax credit on line 46 andeffectively connected with a U.S. tradethe child as a dependent, and the additional child tax credit on line 61.or business. Other items are reportable3. The years for which the claim is

Qualifying Child for Child Tax as effectively connected or notreleased.Credit. A qualifying child for purposes effectively connected with a U.S. trade

Attach the following pages from the of the child tax credit is a child who: or business, depending on how youdecree or agreement: Is claimed as your dependent on elect to treat them.

Cover page (including the other line 7c, and Line 8Wages, salaries, tips, etc.parents SSN on that page), and Was under age 17 at the end of

Enter the total of your effectively The pages that include all of the 2002, andconnected wages, salaries, tips, etc.information identified in 1 through 3 Is (a) your son, daughter, adoptedFor most people, the amount to enterabove, and child, stepchild, grandchild; (b) youron this line should be shown in box 1 of Signature page with the other brother, sister, stepbrother, stepsister,their Form(s) W-2. However, do notparents signature and date of or a descendant of your brother, sister,include on line 8 amounts exemptedagreement. stepbrother, or stepsister (for example,under a tax treaty. Instead, includeyour niece or nephew), whom youthese amounts on line 22 and completeNote: You must attach the required cared for as your own child; or (c) aitem M on page 5 of Form 1040NR.information even if you filed it in an foster child (that is, any child placed

earlier year. with you by an authorized placement Also include on line 8:Exception. You do not have to agency whom you cared for as your Wages received as a household

attach Form 8332 or similar statement if own child), and employee for which you did not receive



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a W-2 form because your employer deferrals plus earnings and (b) excess assets effectively connected with a U.S.paid you less than $1,300 in 2002. contributions plus earnings to a trade or business. Each payer shouldAlso, enter HSH and the amount not retirement plan. But do not include send you a Form 1099-DIV.reported on a W-2 form on the dotted distributions from an IRA* or a

Capital Gain Distributions. If youline next to line 8. Coverdell ESA on line 8. Instead, report

received any capital gain distributions,distributions from an IRA on lines 16a Tip income you did not report to see the instructions for line 14 onand 16b and taxable distributions fromyour employer. Also include allocated page 10.a Coverdell ESA on line 21.tips shown on your W-2 form(s) unless

Nontaxable Distributions. Some*This includes a Roth, SEP, oryou can prove that you received less.distributions are nontaxable becauseSIMPLE IRA.Allocated tips should be shown in box 8they are a return of your cost (or otherof your W-2 form(s). They are not Missing or Incorrect Form W-2.basis). They will not be taxed until youincluded as income in box 1. See

Your employer is required to provide or recover your cost (or other basis). YouPub. 531 for more details. send Form W-2 to you no later thanmust reduce your cost (or other basis)January 31, 2003. If you do not receive

You may owe social security by these distributions. After you getit by early February, ask your employerand Medicare tax on unreported back all of your cost (or other basis),for it. Even if you do not get a Formor allocated tips. See the you must report these distributions asCAUTION

!W-2, you must still report your earnings

instructions for line 53 on page 18. capital gains on Schedule Don line 8. If you lose your Form W-2 or Dependent care benefits, which (Form 1040). For details, see Pub. 550.it is incorrect, ask your employer for ashould be shown in box 10 of your W-2 new one. Dividends on insurance policiesform(s). But first complete Form 2441

Line 9a Taxable interest. Report on are a partial return of theto see if you may exclude part or all ofline 9a all of your taxable interest premiums you paid. Do not

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the benefits.income from assets effectively report them as dividends. Include them Employer-provided adoptionconnected with a U.S. trade or in income only if they exceed the totalbenefits, which should be shown inbusiness. of all net premiums you paid for thebox 12 of your W-2 form(s) with code T.

contract.If you received interest notBut first complete Form 8839 to see if

effectively connected with a U.S. tradeyou may exclude part or all of the Line 11Taxable refunds, credits,or business, report it on page 4 ofbenefits. or offsets of state and local incomeForm 1040NR, unless it is tax exempt Excess salary deferrals. The taxes. If you received a refund, credit,under a treaty and the withholdingamount deferred should be shown in or offset of state or local income taxesagent did not withhold tax on thebox 12 of your W-2 form and the in 2002, you may receive a Formpayment. See Pub. 901 for a quickRetirement plan box in box 13 should 1099-G. If you chose to apply part or allreference guide to the provisions ofbe checked. If the total amount you of the refund to your 2002 estimatedU.S. tax treaties. In addition, interestdeferred for 2002 under all plans was state or local income tax, the amountfrom a U.S. bank, savings and loanmore than $11,000, include the excess applied is treated as received in 2002.association, credit union, or similaron line 8. This limit is increased to

For details on how to figure theinstitution, and from certain deposits$14,000 for section 403(b) plans, if youamount you must report as income, seewith U.S. insurance companies, is taxqualify for the 15-year rule in Pub. 571.Recoveries in Pub. 525.exempt to a nonresident alien if it is not

If you were age 50 or older at theeffectively connected with a U.S. trade Line 12Scholarship and fellowshipend of 2002, your employer may haveor business. grants. If you received a scholarship orallowed an additional deferral of up to

Interest credited in 2002 on deposits fellowship, part or all of it may be$1,000 ($500 for section 401(k)(11) and that you could not withdraw because of taxable.408(p) SIMPLE plans). This additionalthe bankruptcy or insolvency of thedeferral amount is not subject to the If you were a degree candidate, thefinancial institution may not have to beoverall limit on elective deferrals. amounts you used for expenses otherincluded in your 2002 income. For

A higher limit may apply to than tuition and course-relateddetails, see Pub. 550.participants in section 457(b) deferred expenses (fees, books, supplies, andLine 9bTax-exempt interest.compensation plans for the 3 years equipment) are generally taxable. ForCertain types of interest income frombefore retirement age. Contact your example, amounts used for room,investments in state and municipalplan administrator for more information. board, and travel are generally taxable.bonds and similar instruments are not

If you were not a degree candidate,taxed by the United States. If youYou maynotdeduct the amountthe full amount of the scholarship orreceived such tax-exempt interestdeferred. It is not included asfellowship is generally taxable. Also,income, report the amount on line 9b.income in box 1 of your W-2CAUTION

!amounts received in the form of aInclude any exempt-interest dividendsform.scholarship or fellowship that arefrom a mutual fund or other regulated Disability pensions shown on

payment for teaching, research, orinvestment company. Do not includeForm 1099-R if you have not reached other services are generally taxable asinterest earned on your IRA orthe minimum retirement age set by yourwages even if the services wereCoverdell education savings account.employer. Disability pensions receivedrequired to get the grant.Also do not include interest from a U.S.after you reach that age and other

bank, savings and loan association,payments shown on Form 1099-R If the grant was reported oncredit union, or similar institution (or(other than payments from an IRA* or a Form(s) 1042-S, you must generallyfrom certain deposits with U.S.Coverdell education savings account include the amount shown in box 2 ofinsurance companies) that is exempt(ESA)) are reported on lines 17a and Form(s) 1042-S on line 12. However, iffrom tax under a tax treaty or under17b. Payments from an IRA are any or all of that amount is exempt bysection 871(i) because the interest isreported on lines 16a and 16b. Taxable treaty, do not include the treaty-exemptnot effectively connected with a U.S.distributions from a Coverdell ESA are amount on line 12. Instead, include thetrade or business.reported on line 21. treaty-exempt amount on line 22 and

Corrective distributions shown on Line 10Ordinary dividends. Enter complete item M on page 5 of FormForm 1099-R of (a) excess salary your total ordinary dividends from 1040NR.



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Attach any Form(s) 1042-S you See the instructions for item M on distributions on line 14 and check thereceived from the college or institution. page 24 for details. box on that line. Also, be sure you useIf you did not receive a 1042-S form, the Capital Gain Tax Worksheet onWhen completing Form 1040NR:attach a statement from the college or page 16 to figure your tax. Your tax

Be sure you have entered your homeinstitution (on their letterhead) showing may be less if you use this worksheet.country and permanent address in thethe details of the grant. Line 15Other gains or (losses). Ifspace provided on page 1.

you sold or exchanged assets used in aFor more information about Enter $0 on line 12. The $9,000U.S. trade or business, see thescholarships and fellowships in general, reported to you in box 2 ofInstructions for Form 4797.see Pub. 520. Form 1042-S is reported on line 22 (not

line 12). Lines 16a and 16b IRAExample 1. You are a citizen of a Enter $9,000 on line 22. distributions. You should receive acountry that has not negotiated a tax

Enter $0 on line 32. Because none of Form 1099-R showing the amount oftreaty with the United States. You are a the $9,000 reported to you in box 2 of any distribution from your individualcandidate for a degree at ABCForm 1042-S is included in your retirement arrangement (IRA). UnlessUniversity (located in the Unitedincome, you cannot exclude it on line otherwise noted in the line 16a and 16bStates). You are receiving a full32. instructions, an IRA includes ascholarship from ABC University. The Include on line 58 any withholding traditional IRA, Roth IRA, simplifiedtotal amounts you received from ABCshown in box 7 of Form 1042-S. employee pension (SEP) IRA, and aUniversity during 2002 are as follows: Provide all the required information in savings incentive match plan foritem M on page 5. employees (SIMPLE) IRA. Except asTuition and fees $25,000

provided below, leave line 16a blankLine 13Business income or (loss).Books, supplies,and enter the total distribution onIf you operated a business or practicedand equipment 1,000line 16b.your profession as a sole proprietor,Room and

report your effectively connected Exception 1. Enter the totalboard 9,000income and expenses on Schedule C distribution on line 16a if you rolled over$35,000or Schedule C-EZ (Form 1040). part or all of the distribution from one:

The Form 1042-S you received from IRA to another IRA of the same typeInclude any income you received asABC University for 2002 shows $9,000 (for example, from one traditional IRAa dealer in stocks, securities, andin box 2 and $1,260 (14% of $9,000) in to another traditional IRA), orcommodities through your U.S. office. Ifbox 7. SEP or SIMPLE IRA to a traditionalyou dealt in these items through anNote: Box 2 shows only $9,000 IRA.independent agent, such as a U.S.because withholding agents (such as Also, put Rollover next to line 16b.broker, custodian, or commissionedABC University) are not required to If the total distribution was rolled over,agent, your income may not bereport section 117 amounts (tuition, enter zero on line 16b. If the totalconsidered effectively connected with afees, books, supplies, and equipment) distribution was not rolled over, enterU.S. business.on Form 1042-S. the part not rolled over on line 16bLine 14Capital gain or (loss). If

unless Exception 2applies to the partyou had effectively connected capitalWhen completing Form 1040NR:not rolled over.gains or losses, including any Enter on line 12 the $9,000 shown in

If you rolled over the distribution (a)effectively connected capital gainbox 2 of Form 1042-S.in 2003 or (b) from an IRA into adistributions from a mutual fund, you Enter $0 on line 32. Becausequalified plan (other than an IRA),must complete and attach Schedule Dsection 117 amounts (tuition, fees,

attach a statement explaining what you(Form 1040). But see the Exceptionbooks, supplies, and equipment) weredid.below. Enter the effectively connectednot included in box 2 of your Form

gain or (loss) from Schedule D1042-S (and are not included on line 12 Exception 2. If any of the following(Form 1040) on line 14.of Form 1040NR), you cannot exclude apply, enter the total distribution on

any of the section 117 amounts on line line 16a and use Form 8606 and itsGains and losses from disposing of32. instructions to figure the amount toU.S. real property interests are reported Include on line 58 the $1,260 shown enter on line 16b.on Schedule D (Form 1040) andin box 7 of Form 1042-S. You received a distribution from anincluded on line 14 of Form 1040NR.

Example 2. The facts are the same IRA (other than a Roth IRA) and youSee Dispositions of U.S. Realas in Example 1 except that you are a made nondeductible contributions toProperty Interests on page 5.citizen of a country that has negotiated any of your traditional or SEP IRAs forException. You do not have to filea tax treaty with the United States and 2002 or an earlier year. If you madeSchedule D (Form 1040) if both of theyou were a resident of that country nondeductible contributions to thesefollowing apply.immediately before leaving for the IRAs for 2002, also see Pub. 590.

1. The only amounts you have toUnited States to attend ABC University. You received a distribution from a

report on Schedule D (Form 1040) areAlso, assume that, under the terms of Roth IRA.effectively connected capital gainthe tax treaty, all of your scholarship You converted part or all of adistributions. (These amounts shouldincome is exempt from tax because traditional, SEP, or SIMPLE IRA to abe shown in box 2a of Forms 1099-DIVABC University is a nonprofit Roth IRA in 2002.or substitute statements.)educational organization. You had a 2001 or 2002 IRA

2. Those distributions do not includeNote: Many tax treaties do not permit contribution returned to you, with the

28% rate gains, qualified 5-year gains,an exemption from tax on scholarship related earnings or less any loss, by the

unrecaptured section 1250 gains, oror fellowship grant income unless the due date (including extensions) of your

section 1202 gains. (These amountsincome is from sources outside the tax return for that year.

should be shown in boxes 2b throughUnited States. If you are a resident of a You made excess contributions to

2e of Forms 1099-DIV or substitutetreaty country, you must know the your IRA for an earlier year and had

statements.)terms of the tax treaty between the them returned to you in 2002.United States and the treaty country to If both of the above apply, enter your You recharacterized part or all of aclaim treaty benefits on Form 1040NR. effectively connected capital gain contribution to a Roth IRA as a



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traditional IRA contribution, or vice If you received a Form If you are the beneficiary of anversa. RRB-1099-R, see Pub. 575 for employee who died, see Pub. 575. If

information on how to report your there is more than one beneficiary, seeNote: If you received more than onebenefits. Pub. 575 to figure each beneficiarysdistribution, figure the taxable amount

taxable amount.of each distribution and enter the total Partially Taxable Pensions andCost. Your cost is generally your netof the taxable amounts on line 16b. Annuities. Enter the total pension or

investment in the plan as of the annuityEnter the total amount of those annuity payments you received in 2002starting date. It does not include pre-taxdistributions on line 16a. on line 17a. If your Form 1099-R doescontributions. Your net investmentnot show the taxable amount, you mustYou may have to pay an should be shown in box 9b of Formuse the General Rule explained inadditional tax if(a)you received 1099-R for the first year you receivedPub. 939 to figure the taxable part toan early distribution from yourCAUTION

!payments from the plan.enter on line 17b. But if your annuityIRA and the total was not rolled over or

starting date (defined below) was after Rollovers. A rollover is a tax-free(b)you were born before July 2, 1931,July 1, 1986, see below to find out if distribution of cash or other assets fromand received less than the minimumyou must use the Simplified Method to one retirement plan that is contributedrequired distribution from yourfigure the taxable part. to another plan. Use lines 17a and 17btraditional, SEP, and SIMPLE IRAs.

to report a rollover, including a directSee the instructions for line 54 on You can ask the IRS to figure therollover, from one qualified employerspage 18 for details. taxable part for you for a $90 fee. Forplan to another or to an IRA or SEP.

details, see Pub. 939.Lines 17a and 17bPensions andEnter on line 17a the totalannuities. Use lines 17a and 17b to If your Form 1099-R shows a taxable distribution before income tax or otherreport effectively connected pension amount, you may report that amount on deductions were withheld. This amountand annuity payments you received. line 17b. But you may be able to report should be shown in box 1 ofYou should receive a Form 1099-R a lower taxable amount by using the Form 1099-R. From the total onshowing the amount you received. For General Rule or the Simplified Method. line 17a, subtract any contributionsdetails on rollovers and lump-sum

(usually shown in box 5) that were

Annuity Starting Date. Your annuitydistributions, see below. But if this taxable to you when made. From thatstarting date is the later of the first dayincome is not effectively connected withresult, subtract the amount that wasof the first period for which youyour U.S. trade or business, report it onrolled over. Enter the remainingreceived a payment, or the date theline 80.amount, even if zero, on line 17b. Writeplans obligations became fixed.

Do not include the following Rollover next to line 17b.payments on lines 17a and 17b. Simplified Method. You must use Special rules apply to partialInstead, report them on line 8. the Simplified Method if (a) your annuity rollovers of property. For more details

starting date (defined above) was after Disability pensions received before on rollovers, including distributions

July 1, 1986, and you used this methodyou reach the minimum retirement age under qualified domestic relationslast year to figure the taxable part or (b)set by your employer. orders, see Pub. 575.your annuity starting date was after

Corrective distributions of excess Lump-Sum Distributions. If youNovember 18, 1996, and all three ofsalary deferrals or excess contributions received a lump-sum distribution from athe following apply.to retirement plans. profit-sharing or retirement plan, your1. The payments are for (a) your life

Form 1099-R should have the TotalIf you received a Form 1099-R or (b) your life and that of your

distribution box in box 2b checked.that shows Federal income tax beneficiary. You may owe an additional tax if youwithheld, attach it to 2. The payments are from aTIP

received an early distribution from aForm 1040NR. qualified employee plan, a qualifiedqualified retirement plan and the total

employee annuity, or a tax-shelteredSome annuities are tax-exempt. See amount was not rolled over. For details,annuity.section 871(f). see the instructions for line 54 on

3. On your annuity starting date,page 18.Note: If you perform services in the either you were under age 75 or the

United States, your income is generally Enter the total distribution onnumber of years of guaranteedeffectively connected with the conduct line 17a and the taxable part onpayments was fewer than 5. Seeof a U.S. trade or business. (See line 17b.Pub. 575 for the definition ofsection 864 and Regulations guaranteed payments. You may be able to pay less taxsection 1.864-2 for details and

on the distribution if you wereIf you must use the Simplifiedexceptions.) When you receive aborn before January 2, 1936,Method, complete the worksheet on

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pension in a later year as a result ofyou meet certain other conditions, andpage 12 to figure the taxable part ofeffectively connected services, theyou choose to useForm 4972to figureyour pension or annuity. For more

pension is also considered effectively the tax on any part of the distribution.details on the Simplified Method, seeconnected with the conduct of a U.S.You may also be able to use FormPub. 575.trade or business.4972 if you are the beneficiary of a

Fully Taxable Pensions and Age (or Combined Ages) at deceased employee who was bornAnnuities. If your pension or annuity is Annuity Starting Date. If you are the before January 2, 1936. For details,fully taxable, enter it on line 17b; do retiree, use your age on the annuity see Form 4972.not make an entry on line 17a. Your starting date. If you are the survivor of a

Line 20Unemploymentpayments are fully taxable if either of retiree, use the retirees age on his orcompensation. You should receive athe following applies. her annuity starting date. But if yourForm 1099-G showing the total

You did not contribute to the cost annuity starting date was after 1997unemployment compensation paid to(defined below) of your pension or and the payments are for your life andyou in 2002.annuity or that of your beneficiary, use your

You got your entire cost back tax free combined ages on the annuity starting If you received an overpayment ofbefore 2002. date. unemployment compensation in 2002



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and you repaid any of it in 2002,Simplified Method WorksheetLines 17a and 17bsubtract the amount you repaid from(keep for your records)the total amount you received. Enterthe result on line 20. Also, enterBefore you begin:If you are the beneficiary of a deceased employee or formerRepaid and the amount you repaid onemployee who died before August 21, 1996, see Pub. 939 to find out if you are entitledthe dotted line next to line 20. If, into a death benefit exclusion of up to $5,000. If you are, include the exclusion in the2002, you repaid unemploymentamount entered on line 2 below.compensation that you included ingross income in an earlier year, youNote: If you had more than one partially taxable pension or annuity, figure the taxablemay deduct the amount repaid onpart of each separately. Enter the total of the taxable parts on Form 1040NR, line 17b.Schedule A (Form 1040NR), line 11.Enter the total pension or annuity payments received in 2002 on Form 1040NR,But if you repaid more than $3,000, seeline 17a.Repayments in Pub. 525 for details onhow to report the repayment.1. Enter the total pension or annuity payments received in 2002. Also,

enter this amount on Form 1040NR, line 17a . . . . . . . . . . . . . . . . . 1.Line 21 Other income. Use this line

2. Enter your cost in the plan at the annuity starting to report any other income effectivelydate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. connected with your U.S. business that

is not reported elsewhere on your3. Enter the appropriate number from Table 1 below.return or other schedules. List the typeBut if your annuity starting date was after 1997 andand amount of income. If necessary,the payments are for your life and that of yourshow the required information on anbeneficiary, enter the appropriate number from Tableattached statement. For more details,2 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.see Miscellaneous Income in Pub.

4. Divide line 2 by line 3 . . . . . . . . . . . . . . . . . . . . . . . 4. 525.

5. Multiply line 4 by the number of months for which thisTaxable distributions from a

years payments were made. If your annuity starting

Coverdell education savings accountdate was before 1987, skip lines 6 and 7 and enter (ESA). Distributions from a Coverdellthis amount on line 8. Otherwise, go to line 6 . . . . . . 5.

ESA may be taxable if they are more6. Enter the amount, if any, recovered tax free in years than the qualified education expenses

after 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. of the designated beneficiary in 2002.See Pub. 970. Include these taxable7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . 7.distributions on line 21.

8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . 8.

You may have to pay an9. Taxable amount. Subtract line 8 from line 1. Enter the result, butadditional tax if you received anot less than zero. Also, enter this amount on Form 1040NR, linetaxable distribution from aCAUTION

!17b. If your Form 1099-R shows a larger amount, use the amount

Coverdell ESA. See the Instructions foron this line instead of the amount from Form 1099-R . . . . . . . . . . . 9.Form 5329.

Qualified tuition programearnings. You must generally include

Table 1 for Line 3 Above this type of income on line 21.However, you may be able to exclude

AND your annuity starting date wasIF the age atpart or all of the earnings from income if

annuity starting(a) the qualified tuition program was

before November 19, 1996, after November 18, 1996,date (see page 11)established and maintained by a state

enter on line 3 . . . enter on line 3 . . .was . . .(or agency or instrumentality of thestate) and (b) any part of the55 or under 300 360distribution was used to pay qualified

5660 260 310 higher education expenses. SeePub. 970.6165 240 260

6670 170 210You may have to pay an

71 or older 120 160 additional tax if you receivedqualified tuition programCAUTION

!earnings that are included on line 21.Table 2 for Line 3 Above

See the Instructions for Form 5329.IF the combinedages at annuity Report other income on page 4 ofstarting date (see Form 1040NR if not effectivelypage 11) were . . . THEN enter on line 3 . . . connected with a U.S. trade or

business.110 or under 410

Line 22. Use line 22 to report your total111120 360effectively connected income that is

121130 310exempt from tax by a tax treaty. Do not

131140 260 include this exempt income on line 23.Also, you must complete item M on141 or older 210page 5 of Form 1040NR.



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were self-employed and had a SEP,Student Loan Interest Deduction WorksheetLine 26SIMPLE, or qualified retirement plan.(keep for your records)

If you were covered by a retirementBefore you begin: plan and you file Form 8815 or you Complete Form 1040NR, lines 27 through 32, if they apply to you. exclude employer-provided adoption

benefits, see Pub. 590 to figure the Figure any amount to be entered on the dotted line next to line 33 (see theamount, if any, of your IRA deduction.instructions for line 33 on page 14).

See the instructions for line 26 on this page. Special Rule for MarriedIndividuals. If you checked filing statusbox 3, 4, or 5 and you were not covered1. Enter the total interest you paid in 2002 on qualified student loansby a retirement plan but your spouse(defined below). Do not enter more than $2,500 . . . . . . . . . . . . . . 1.was, you are considered covered by a2. Enter the amount from Form 1040NR, line 23. . . . . . 2.plan unless you lived apart from your

3. Enter the total of the amounts from Form 1040NR, spouse for all of 2002.line 24, line 25, and lines 27 through 32, plus any

See Pub. 590 for more details.amount you entered on the dotted line next to line 33 3.Line 26Student loan interest

4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . 4.deduction. You may take this

5. Is line 4 more than $50,000? deduction only if all four of thefollowing apply.

No. Skip lines 5 and 6, enter -0- on line 7, and go1. You paid interest in 2002 on ato line 8.

qualified student loan (see below). Yes. Subtract $50,000 from line 4 . . . . . . . . . . . . 5. 2. You checked filing status box 1,

2, or 6.6. Divide line 5 by $15,000. Enter the result as a decimal (rounded to at3. Your modified adjusted grossleast three places). If the result is 1.000 or more, enter 1.000 . . . . . 6. .

income (AGI) is less than $65,000. Use7. Multiply line 1 by line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. lines 2 through 4 of the worksheet on8. Student loan interest deduction. Subtract line 7 from line 1. Enter this page to figure your modified AGI.

the result here and on Form 1040NR, line 26. Do not include this 4. You are not claimed as aamount in figuring any other deduction on your return (such as on dependent on someones (such as yourSchedule A (Form 1040NR), Schedule C (Form 1040), Schedule E parents) 2002 tax return.(Form 1040), etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

Use the worksheet on this page tofigure your student loan interest

Any reimbursements you received for deduction.these expenses that were not reportedAdjusted Gross Income Qualified Student Loan. This isto you in box 1 of your Form W-2.

any loan you took out to pay theLine 24Educator expenses. If youLine 25 IRA deduction. qualified higher education expenses forwere an eligible educator in 2002, you

yourself, your spouse, or anyone whomay deduct up to $250 of qualified If you made any nondeductiblewas your dependent when the loan wasexpenses you paid in 2002. An eligible contributions to a traditionaltaken out. The person for whom theeducator is a kindergarten through individual retirement

TIP

expenses were paid must have beengrade 12 teacher, instructor, counselor, arrangement (IRA) for 2002, youmust an eligible student (see page 14).principal, or aide in a school for at least report them onForm 8606.However, a loan is not a qualified900 hours during a school year.

If you made contributions to a student loan if (a) any of the proceedstraditional IRA for 2002, you may beQualified expenses include were used for other purposes or (b) theable to take an IRA deduction. But youordinary and necessary expenses paid loan was from either a related personmust have had earned income to do so.in connection with books, supplies, or a person who borrowed theA statement should be sent to you byequipment (including computer proceeds under a qualified employerJune 2, 2003, that shows allequipment, software, and services), plan or a contract purchased undercontributions to your traditional IRA forand other materials used in the such a plan. To find out who is a2002.classroom. An ordinary expense is one related person, see Pub. 970.

that is common and accepted in your Were You Covered by a Qualified higher educationeducational field. A necessary expense Retirement Plan? If you were covered expenses generally include tuition,is one that is helpful and appropriate for by a retirement plan (qualified pension, fees, room and board, and relatedyour profession as an educator. An profit-sharing (including 401(k)), expenses such as books and supplies.expense does not have to be requiredannuity, SEP, SIMPLE, etc.) at work or The expenses must be for education into be considered necessary. through self-employment, your IRA a degree, certificate, or similar programdeduction may be reduced orQualified expenses do not include at an eligible educational institution. Aneliminated. But you can still makeexpenses for home schooling or for eligible educational institution includescontributions to an IRA even if younonathletic supplies for courses in most colleges, universities, and certaincannot deduct them. In any case, thehealth or physical education. You must vocational schools. You must reduceincome earned on your IRAreduce your qualified expenses by the the expenses by the following benefits.contributions is not taxed until it is paidfollowing amounts. Employer-provided educationalto you.

Excludable U.S. series EE and I assistance benefits that are notsavings bond interest from Form 8815. The Retirement plan box in box 13 included in box 1 of your W-2 form(s). Nontaxable qualified state tuition of your W-2 form should be checked if Excludable U.S. series EE and Iprogram earnings. you were covered by a plan at work savings bond interest from Form 8815. Nontaxable earnings from Coverdell even if you were not vested in the plan. Nontaxable qualified state tuitioneducation savings accounts. You are also covered by a plan if you program earnings.



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Nontaxable earnings from Coverdell If you qualify to take the deduction, Deduction for clean-fuel vehicleseducation savings accounts. use the worksheet below to figure the (see Pub. 535). Identify as Any scholarship, educational amount you can deduct. Clean-Fuel.assistance allowance, or other payment Performing-arts-related expensesException. Use Pub. 535 instead of(but not gifts, inheritances, etc.) (see Form 2106 or 2106-EZ). Identifythe worksheet below to find out how toexcluded from income. as QPA.figure your deduction if either of the

For more details on these expenses, Reforestation amortization (seefollowing applies.see Pub. 970. Pub. 535). Identify as RFST.

You had more than one source of Repayment of supplementalAn eligible student is a person who: income subject to self-employment tax.unemployment benefits under the

Was enrolled in a degree, certificate, You are using amounts paid forTrade Act of 1974 (see Pub. 525).or other program (including a program qualified long-term care insurance toIdentify as Sub-Pay TRA.

of study abroad that was approved for figure the deduction. Contributions to section 501(c)(18)credit by the institution at which the Line 30Self-employed SEP, pension plans (see Pub. 525). Identifystudent was enrolled) leading to a SIMPLE, and qualified plans. If you as 501(c)(18).recognized educational credential at an were self-employed or a partner, you Contributions by certain chaplains toeligible educational institution and may be able to take this deduction. See section 403(b) plans (see Pub. 517).

Carried at least half the normal Pub. 560 or, if you were a minister, Identify as 403(b).full-time workload for the course of Pub. 517.study he or she was pursuing. Line 34Adjusted gross income. IfLine 31 Penalty on early

line 34 is less than zero, you may haveLine 27Archer MSA deduction. If withdrawal of savings. Thea net operating loss that you can carryyou made a contribution to an Archer Form 1099-INT or Form 1099-OID youto another tax year. See Form 1045MSA for 2002, you may be able to take received will show the amount of anyand its instructions for details.this deduction. See Form 8853 for penalty you were charged.

details.Line 32Scholarship and fellowship

Line 28 Moving expenses. grants excluded. If you received aEmployees and self-employed persons Tax Computation onscholarship or fellowship grant and(including partners) can deduct certain were a degree candidate, enter Income Effectivelymoving expenses. The move must be in amounts used for tuition andconnection with employment that course-related expenses (fees, books, Connected With A U.S.generates effectively connected supplies, and equipment), but only toincome. Trade or Businessthe extent the amounts are included

on line 12. See the examples in theIf you moved in connection with your Line 36Itemized deductions. Enterinstructions for line 12 beginning onjob or business or started a new job, the total itemized deductions from linepage 9.you may be able to take this deduction. 17 of Schedule A on page 3 of the

But your new workplace must be at Line 33. Include in the total on line 33 form.least 50 miles farther from your old any of the following adjustments that

Note: Residents of India who werehome than your old home was from are related to your effectivelystudents or business apprentices mayyour old workplace. If you had no connected income. To find out if yoube able to take the standard deductionformer workplace, your new workplace can take the deduction, see the form orinstead of their itemized deductions.must be at least 50 miles from your old publication indicated. On the dotted lineSeePub. 519for details.home. The deduction is generally next to line 33, enter the amount of

limited to moves to or within the United your deduction and identify it as Line 38Deduction for exemptions.States or its possessions. If you meet indicated. You can claim exemptions only to thethese requirements, see Pub. 521. Use

Self-Employed Health Insurance Deduction WorksheetLine 29Form 3903 to figure the amount toenter on this line. (keep for your records)

Line 29Self-employed healthinsurance deduction. If you were Before you begin:self-employed and had a net profit for Complete Form 1040NR, line 30, if it applies to you.the year, you may be able to deduct If you are claiming the health insurance credit for eligible recipients (see page 1),part of the amount paid for health complete Form 8885.insurance for yourself, your spouse,

Be sure you have read the Exceptionabove to see if you can use this worksheetand dependents. The insurance plan

instead of Pub. 535 to figure your deduction.must be established under yourbusiness. But if you were also eligible

1. Enter the total amount paid in 2002 for health insurance coverageto participate in any subsidized health

established under your business for 2002 for you, your spouse,plan maintained by your or your and dependents. But do not include amounts for any month youspouses employer for any month orwere eligible to participate in an employer-sponsored health planpart of a month in 2002, amounts paidor any amount on Form 8885, line 11 . . . . . . . . . . . . . . . . . . . . . 1.for health insurance coverage for that

month cannot be used to figure the 2. Multiply line 1 by 70% (.70) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.deduction. For example, if you were

3. Enter your net profit and any other earned income* from theeligible to participate in a subsidized

business under which the insurance plan is established, minus anyhealth plan maintained by your

deduction you claim on Form 1040NR, line 30 . . . . . . . . . . . . . . . 3.spouses employer from September 30

4. Self-employed health insurance deduction. Enter the smaller ofthrough December 31, you cannot useline 2 or line 3 here and on Form 1040NR, line 29 . . . . . . . . . . . . 4.amounts paid for health insurance

coverage for September through *Earned incomeincludes net earnings and gains from the sale, transfer, or licensing ofDecember to figure your deduction. For property you created. It does not include capital gain income.more details, see Pub. 535.



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extent of your income that is effectively 2. You use Schedule J (Form are gains) and the amount onconnected with a U.S. trade or 1040) (for farm income) to figure your Form 1040NR, line 39, is more thanbusiness. tax. zero, use Part IV of Schedule D to

figure your tax.Individuals. If you are a Form 8615. You must generally usenonresident alien individual, multiply Form 8615 to figure the tax for any Capital Gain Tax Worksheet. If$3,000 by the total number of child who was under age 14 at the end you received capital gain distributionsexemptions entered on line 7d. (If you of 2002, and who had more than but you are not required to filewere a resident of Japan or the $1,500 of investment income, such as Schedule D (Form 1040), use theRepublic of Korea (South Korea), you taxable interest, ordinary dividends, or worksheet on page 16 to figure yourmust figure the exemptions for your capital gains (including capital gain tax.spouse and children according to the distributions), that is effectively

Schedule J (Form 1040). If you hadproportion your U.S. income bears to connected with a U.S. trade or income from farming, your tax may beyour total income. You must also business. But if neither of the childsless if you choose to figure it usingcomplete item I on page 5 of the form. parents was alive on December 31,income averaging on Schedule J.For details, see Pub. 519.) But use the 2002, do not use Form 8615 to figure

worksheet on this page to figure the the childs tax. Line 41Alternative minimum tax.amount, if any, to enter on line 38 if The tax law gives special treatment to

A child born on January 1,your adjusted gross income from line some kinds of income and allows1989, is considered to be age35 is more than $137,300 if you special deductions and credits for some14 at the end of 2002. Do notchecked filing status box 1 or 2; CAUTION

!kinds of expenses. If you benefit from

use Form 8615 for such a child.$103,000 if you checked filing status these provisions, you may have to paybox 3, 4, or 5; $206,000 if you checked Schedule D (Form 1040). If you a minimum amount of tax through thefiling status box 6. had a net capital gain on Schedule D alternative minimum tax. This tax is

Estates. If you are filing for an (both lines 16 and 17 of that schedule figured on Form 6251 for individuals. Ifestate, enter $600 on line 38.

Deduction for Exemptions WorksheetLine 38Trusts. If you are filing for a trust

See the instructions for line 38 beginning on page 14.whose governing instrument requires it (keep for your records)to distribute all of its income currently,enter $300 on line 38. If you are filing

Caution: If you are filing for a qualified disability trust (defined on this page), use thisfor a qualified disability trust (definedworksheet only if the trusts modified AGI* is more than $137,300. Also, skip line 1,in section 642(b)(2)(C)(ii)), enter $3,000enter $3,000 on line 2, enter the trusts modified AGI on line 3, and enter $137,300 onon line 38. But if the qualified disabilityline 4.trusts modified AGI (determined under

section 67(e) without regard to section 1. Is the amount on Form 1040NR, line 35, more than the amount shown on line 4642(b)) is more than $137,300, use the below for your filing status?worksheet on this page to figure the

No. Stop. Multiply $3,000 by the total number of exemptions claimed on Formamount to enter on line 38. If you are1040NR, line 7d, and enter the result on line 38.filing for any other trust, enter $100 on

line 38. Yes. Go to line 2.

2. Multiply $3,000 by the total number of exemptions claimed onA qualified disability trust mustForm 1040NR, line 7d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.enter Section 642(b)(2)(C) on

the dotted line next to line 38.CAUTION! 3. Enter the amount from Form 1040NR, line 35 . . . 3.Line 40Tax. Use one of the 4. Enter the amount shown below for the filingfollowing methods to figure your tax. status box you checked on page 1 of FormAlso, include in the total on line 40 any 1040NR:tax from Forms 8814 and 4972. Besure to check the appropriate box(es). Box 1 or 2, enter $137,300

Box 3, 4, or 5, enter $103,000Tax Table or Tax RateSchedules. If you are filing for an Box 6, enter $206,000 . . . . . . . . . . . . . . . . . . 4.estate or trust, use the Tax Rate

5. Subtract line 4 from line 3. If the result is moreSchedules on page 39.than $122,500 ($61,250 if you checked filing

Individuals. If your taxable income status box 3, 4, or 5), stop here. You cannot(line 39) is less than $100,000, you take a deduction for exemptions. . . . . . . . . . . . . 5.must use the Tax Table, which startson page 27, to figure your tax. Be sureyou use the correct column. If you 6. Divide line 5 by $2,500 ($1,250 if you checkedchecked filing status box 3, 4, or 5, you filing status box 3, 4, or 5). If the result is not amust use the Married filing separately whole number, increase it to the next highercolumn. If your taxable income is whole number (for example, increase 0.0004$100,000 or more, use the Tax Rate to 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.Schedules on page 39.

7. Multiply line 6 by 2% (.02) and enter the result as a decimal . . . . . 7. .Exception. Do not use the Tax

8. Multiply line 2 by line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.Table or Tax Rate Schedules to figureyour tax if either 1 or 2 below applies. 9. Deduction for exemptions. Subtract line 8 from line 2. Enter the

result here and on Form 1040NR, line 38 . . . . . . . . . . . . . . . . . . 9.1. You are required to figure yourtax using Form 8615, Schedule D *Figure the trusts modified AGI by applying section 67(e) without regard to section(Form 1040), or the Capital Gain Tax 642(b).Worksheet on page 16.



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Intangible drilling, circulation,Capital Gain Tax WorksheetLine 40research, experi

Documents

US Internal Revenue Service: i1040nr--2002